On September 22, 2002 we, the people of Germany, elected a new parliament.
Although the German chancellor is, in fact, elected by the Bundestag, the German parliament, most of the election campaigns focused on the chancellor candidates of the two major german parties, Edmund Stoiber, CDU and Gerhard Schröder, SPD.
While Schöder was the current chancellor and Stoiber the opposition's candidate, most of Stoiber's team were the same old faces known from 12 years under Helmut Kohl.
Everyone thought is would be a narrow race who will win, but in fact it was ridiculously narrow.

Results:

CDU/CSU (conservative the so-called "Union"):		38.5 %	(1998: 33.1)
SPD (socialist, comparable to Labour in the UK):	38.5 %	(1998: 40.9)
Die Grünen (green party):				8.6 %	(1998: 6.7)
FDP (liberals):						7.4 %	(1998: 6.2)
PDS (left-wing socialists)				4.0 %	(1998: 5.1)
Others:							3.0 %	(1998: 5.9)
79.1 % of 61.5 million voters voted (1998: 82.2 %). 1.2 % of votes were invalid (1998: 1.3).
Note: a total of 8864 votes more were cast on the SPD than on the Union.

This means that the middle-left coalition of SPD and Grüne are able to continue their gouvernance although the SPD suffered extreme loss of votes.
The seats in the Bundestag are distributed as follows:

SPD:		251 seats
CDU/CSU:	248 seats
Die Grünen:	55 seats
FDP:		47 seats
PDS:		2 seats
Two notes on specialities of the German electional system: representatives are elected by lists for each party (so-called "second vote") and directly for each of the 299 "voting departments", these are willignly chosen areas of Germany with roughly the same population.
If a party wins more direct seats per federal state than it would have deserved by the percental share of votes in the state, a so-called "Überhangmandat" is created, this means the party gets one or more extra seats. (Additional Member System)
While the CDU got only one Überhangmandat (in Sachsen), the SPD got four (one in Hamburg, two in Sachsen-Anhalt and one in Thüringen); thus creating the three-seat difference between the two partys.
Although the PDS didn't reach 5% of total votes (which is the limit for being member of the Bundestag), two of their candidates nevertheless won the direct election in their departments and therefore are members of the Bundestag. If a third direct candidate would have won, the PDS would have recieved an amount of seats equal to their percentage of "second votes".

Analysis of the election by BtS
As i am a student of political science i think i am competent enough to give some comments on this results.
I think its a good thing that Schröder and the SPD can continue their work.
While there are no major differences between the two big partys in the "big" fields like economy, there are some things Stoiber wanted to stop or remove if he had won the election:
First of all, being the candidate of the moral majority (read: conservative christians), he wanted to remove one of the most important achievements in the field of social politics: the equal rights for homosexual relationships, the so-called "homo marriage". "Homo-Marriage" didn't mean more than that a homosexual couple has the ability to acieve the same rights before the law as a heterosexual married couple, especially concerning taxes (lesser for married couples), inheriting (if someone dies without leaving a testament, only their spouse is a legal heir, not their long-time boy- or girlfriend) and adoption (easier). Still not completely equal to a marriage, a registered homosexual partnership is equal to a heterosexual marriage in the most important aspects of law.
Second, Stoiber wanted to cut immigration to germany, even for needed employees with a job contract.
And, on the top of all that, he wanted to re-start building nuclear power plants just after the Grünen had sucessfully fought a fight for the end of the user of nuclear technology for power supply, with the last plant being shut down in 20 years.
I know that much trouble was going on concerning Schröder's foreign politics, especially in dealing with Dubya's Iraq politics. In my opingion Schroeder did the right thing when he told Bush that germany will not participate in any kind op military action against Iraq. If the U.S. really attack Iraq, the will be the agressor in this conflict, no matter what kind of an asshole Saddam is.
International treatys, especially the "four and two"-treaty signed after WW II forbid germany ever to be the agressor in a war again.
The four and two-treaty was a plan to keep germany under control after they started both world wars - the four powers who forced this treaty were the winners of WW II, among them - the USA.
And even as part of a UN mission it's Germany's own choice it they want to participate. If there is some kind of german-american friendship, its our right -as friend of the USA- to tell them if we think they are wrong.
Concerning these rumours our DOJ's head, Herth Däubler-Gmelin, should have compared Bush and Hitler: It is still not proven if she really said it (as the only paper reporting the incident is conservative, this might have been an attempt to turn around voter's opignions, especially as the incident was reported only three days prior the election). Even if she did it, chancellor Schröder apologized, she resigned, all is well.
Bush's policy of literally stopping any communication with germany is nothing but childish.

While Schröder and his minsters started off quite well after the 1998 elections and it really seemed like some "fresh air" would blow away the dust from twelve years under Kohl, he soon started to struggle. After he sucessfully integrated Germany as a full, trustworthy partner into the international community (even serving in military UN missions) and creating new jobs, big reform projects like health insurance and retirement pay system did not go as far as needed and with the burst of the new economy bubble the economy collapsed.
Risen like phoenix from the ashes the Union quickly recovered from the loss of trust they suffered from corruption and donation scandals, stating the socialist simply don't know how to work with money.
From 2000 on, the surveys recorded a change in the voter's will, with rising figures for the Union with every collapsed new economy startup.
After this, everything seemed to work as made for the Union, the economy continued to struggle, their newly-chose candidate Stoiber managed to suggest they would have the better economical competence without ever offering an own concept and finally, just as the SPD started to introduce a new law on immigration into Germany, some arab students from Germany blew up the WTC. Since then, everyone aceppted it as a fact that the winner of this election would be Edmund Stoiber.
Until suddenly the page turned again as Schroeder demonstrated his ability to sucessfully manage most crises as the rivers Elbe and Donau flooded most of eastern germany. Schröder visited the victims, assured financial aid and passed a law to finance the reconstruction of the devastated shorelines within a week.
Suddenly, the SPD was in front of the Union again, until aforementioned nazi-comparisation, real or not, led some voters away from the SPD.
The Grünen, with their focus on environmental issues, got a boost from the flood too, as they always were against the straightening of rivers which -partly- led to the catastrophe.
Last and least, the true losers of this election were the FDP and the PDS. While the PDS had most of its followers in eastern germany and many of them voted SPD to prevent Stoiber (who wanted to cut financial aids for the ex-GDR), the FDP suffered from a campaign against israel's politics started by their vice-president, Jürgen W. Möllemann without any coordination with the rest or the party. This campaign was widely regarded as anti-semitic and a try to fish some votes from the extreme right (read: Nazis). While they still gained some votes, they missed their own aim of becoming a third major party with at least 18 %.

Sources: www.bundeswahlleiter.de (federal office of elections), www.spiegel.de (german news magazine)